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Battening down the batches – survival challenges for small Australian wine producers

Australia’s small and medium sized wine companies have never had it so hard and they need to conduct an honest “warts and all” analysis of their businesses, and be prepared to make tough decisions to survive the current market turmoil.

That’s the message from this year’s Wine Roadshow staged by Australia’s leading wine lawyers, Finlaysons, across the country's major wine-producing regions.

“It’s crunch time for many grape growers and winemakers in Australia”, says Finlaysons’ wine partner and Wine Group leader, Will Taylor, himself a wine producer. “They need to look at all aspects of their business and be prepared to jettison those areas that are hurting them.”

As well as short-term survival issues, the 14th Wine Roadshow seminar series entitled “Battening Down the Batches”, is looking at the emerging long-term issue of climate change and its likely impacts on the wine industry. Mr Taylor believes that this is the biggest issue facing the wine industry, both domestically and on a global basis.

The acclaimed annual Wine Roadshow takes legal, financial and industry expertise to winemakers, grape growers and suppliers of goods and services to the wine industry to 10 major wine regions, from Margaret River in the west to the Hunter Valley in the east.

Mr Taylor, who will address the Barossa forum on “Restructuring the Business to Survive and Thrive” said the full impact of the gluts of grapes, wine and brands on Australian wine companies was yet to become apparent, but that he believed they would be the catalysts for major change in the industry.

“Many small wine companies are only just economic in the good times. They do not have a hope of surviving as profitable businesses in the current market environment without changing the way they are structured and what they do,” he said”

“Traditionally most smaller wine producers are vertically integrated, comprising a range of businesses – grape growing, wine production, marketing/brand development, sales, etc. They need to look at each of these separate businesses and work out whether they really should be in all of them. Which are working and which are not? Which are they good at?”

“They need to take the emotion out of the decision and challenge their business models objectively. If they don’t, many of them will be forced to close their doors.”

Dianne Davidson, from Davidson Viticultural Consulting Services, will address the seminars on “How to Survive if You Can’t Sell Your Grapes”, looking at options such as dropping the fruit on the ground, “mothballing” the vineyard, letting it go to “jungle” or selling it.

Jonathan Scott, from Ernst & Young, will advise on “How to Manage your Wine Company in an Ultra-Competitive Market Place”, looking at strategies to conserve funds or cut costs, cash flow generation without “trashing” the brand, renegotiating with bankers, insolvent trading and market opportunities.

Finlaysons’ environmental partner, Fraser Bell, and Finlaysons’ environmental consultant, Katherine Wells, will address the conference on the likely climatic and regulatory impacts on the wine industry of climate change.

“Many old hands say the market for grapes and wine is currently the toughest it has ever been in this country,” Mr Taylor said. “The industry will come through this trough, stronger than it’s ever been, but individual wine businesses that want to be around when conditions improve would do well to put all aspects of their business under the microscope.”

For more information, contact Patricia Huish, Finlaysons on (08) 8235 7450.



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